Building Your Best Future: Federal Long Term Care Considerations

As more and more federal employees reach retirement eligibility, the realities of age and health are becoming increasingly pressing concerns. The potential need for long term care is an essential part of that conversation — so let’s talk about it.

In this card stack, Government Business Council, the research arm of Government Executive, presents a snapshot of the financial, health, and emotional considerations associated with federal long term care.

Long Term Care 101

According to the U.S. Department of Health and Human Services (HHS), approximately 70 percent of people turning age 65 will require long term care at some point in their lives. For individuals who can no longer perform Activities of Daily Living (ADLs) — everyday activities such as eating, bathing, and dressing — by themselves, having access to a range of robust services and support systems is essential. Other common long term care services provide assistance with Instrumental Activities of Daily Living (IADLs), including:

Housework,

Managing money,

Taking medication,

Preparing and cleaning up after meals,

Shopping for groceries or clothes,

Using the telephone or other communication devices,

Caring for pets,

Responding to emergency alerts (i.e., fire alarms),

...and more.

In other words, long term care readiness can mean all the difference in the world when it comes to quality of life — and in order to prepare for all possibilities, it’s important that you adjust your retirement plans and discuss your wishes with family members long before the need for long term care ever arises.

Mythbusting: "But I'm Too Young for Long Term Care!"

Okay, so the need for long term care may be a very real possibility in the future — but for now, you’re still a bit too young to be thinking about it, right? Wrong. While it may primarily be a consideration for older individuals, the truth is, the need for long term care can arise from various conditions besides aging. These include:

Injury,

Diseases,

Developmental disabilities,

Disabling chronic conditions, and

Cognitive impairment.

In other words, anyone might need long term care at any point their lives; in fact, according to a 2007 study, nearly 42 percent of long term care is provided to people under age 65. The truth is, car accidents, illnesses, and other debilitating events can happen to anyone — and while we can’t prevent life from taking its course, we can make sure that we’re prepared for the worst if and when it happens.

Mythbusting: "My Family's Got This"

Kids are always going to love their parents, but let’s face it: in today’s hectic world, adult children are further away from their parents and living increasingly busy lives of their own. Providing long term care for a family member, however, is essentially a full-time job: a commitment that demands a significant amount of time and energy, often from multiple members of the family. And even if your family does manage to carve out the requisite caregiving time, there are still the cost considerations — providing long term care often means lost wages, pension benefits, and Social Security. Thus, while depending on family might be a viable option for you, it may be apt to consider alternative forms of assistance.

Mythbusting: "I'll Just Rely on Medicare"

“Well, can’t I just depend on Medicare to cover my long term care costs?” you might be asking. It’s true: some public programs cover a portion of costs under certain circumstances. However, every program has specific rules regarding coverage, qualification, time limitations, and costs. Medicare, for instance, only covers medically necessary care and focuses on medical acute care, such as physician visits, drugs, and hospital stays. It also centers on short-term services for conditions that are expected to improve — for example, physical therapy to help regain function after a fall or stroke.

What it doesn’t cover, however, is the bulk of long term care services (i.e., help with bathing, custodial care). Medicare only pays for the first 100 days (100% coverage for the first 20 days and then 80% up to 100 days) of skilled care in a nursing facility, hospice care, or home health care if you meet the following conditions:

You’ve had a recent prior hospital stay of at least 3 days

You’re admitted to a Medicare-certified nursing facility within 30 days of your prior hospital stay

Finally, Medicare covers hospice care if you have a terminal illness and are not expected to live more than 6 months. In other words, successful long term care planning requires comprehensive knowledge or what is and isn’t covered — for more information, visit www.medicare.gov.

Mythbusting: "Okay, What About Other Programs?"

So what other programs have you covered? Some might be inclined to turn toward Medicaid; Once your state determines that you are eligible for Medicaid, it will make an additional determination of whether you qualify for long term care services; however, eligibility rules and covered services vary by state, and personal income prevents many individuals from qualifying for Medicaid in the first place.

There’s also health insurance — but many forms of insurance, such as FEHB, TRICARE, and TRICARE for Life, follow the same general rules as Medicare with regard to long term care services: coverage are generally limited to skilled, short-term, and medically necessary care:

Stay in a skilled nursing facility is limited to 100 days and must follow a recent hospitalization for the same condition.

Coverage of home care only extends to medically necessary skilled care.

Mythbusting: "I Can Save Enough on My Own"

I’m a responsible saver — can’t I just save enough over time to protect myself down the road? It’s a thought that crosses many of our minds, but experts say it can have damaging consequences down the road.

While personal savings may go some way toward covering long term care costs, you should consider some of the current national averages for long term care services before throwing all your eggs in one basket:

$21 per hour for a home health aide

$79 per day for care in an adult day care center

$3,922 per month for care in an assisted living facility

$251 per day for a semiprivate room in a nursing home

$282 per day for a private room in a nursing home

It’s true that home care is generally more affordable than nursing home care. However, the national average for the cost of a 6-hour visit by a home health aide is $126. That amounts to $32,760 per year for a home health aide visiting 6 hours per day, 5 days a week. It’s possible your personal savings can cover those kind of costs, but do you really want to risk it? By considering other options, including long term care insurance, you can better position yourself for stable care and services that will last you through the ups and downs of your financial journey.

Ready...or Not? Federal Employees and Long Term Care

We’ve established that long term care applies to more of the population than we often realize. This extends to federal employees: according to a 2015 GBC poll, nearly 8 in 10 feds have had experience with long term care. Over half have been, currently are, or are expected to be caregivers, and of the respondents who haven't personally provided care, nearly 30 percent still report either knowing caregivers or people who require long term care services.

In spite of these numbers, however, many federal employees have yet to fully prepare for what may lie ahead: GBC found that less than 3 in 10 of the respondents polled have an established plan for long term care. Most are unsure of how to prepare for the specifics, and nearly 30% aren’t factoring long term care into their retirement considerations at all. These findings are echoed in national statistics: 1 in 4 individuals age 45 and over report that they would be financially unprepared if they were to suddenly require extended care services for an indefinite period.

In the face of rising costs, it’s increasingly unaffordable to overlook the potential need for long term care. By researching your options and establishing concrete financial plans, you can create the best possible future for yourself and your loved ones.

Considering Long Term Care Insurance

Before rushing headlong into a long term care insurance program, it’s good to take a step back and survey your options. At the end of the day, don’t lose track of what’s essential: the right long term care insurance plan should cover you in a variety of settings for both personal and custodial services.Here are some tips:

Don’t buy more insurance than you think you need — personal savings and family may be able to supplement your care needs.

Don’t buy too little insurance — while you can usually decrease coverage, it’s harder to increase coverage, especially if your health has declined.

Research and consider different policies and options before making a decision.

If you choose a policy that only pays for stay in a facility, plan for other expenses (e.g., supplies, medications, linens, services, etc.) that your policy may not cover.

It costs less to buy coverage when you’re younger. Yes, millennials, we’re looking at you!

Make sure you can afford the insurance over time — the market has been seeing rate increases, so plan for these as you determine an accessible premium.

Don’t feel pressured into making a decision!

At the same time, sometimes it’s not in one’s best interest to buy long term care insurance. For example, you should really only consider long term care insurance if you have assets totaling $70,000 or more (not including your home). Likewise, buying long term care may not make sense until you can afford the premiums, particularly if the premiums amount to 7% or more of your current income. And if the Social Security of Supplemental Security Income (SSI) is your main source of income or you’re simply struggling to live paycheck-to-paycheck, buying long term care insurance can wait until you’ve established some financially independence down the road.

Long Term Care Insurance: Next Steps

So, it’s time to pull the trigger and buy your long term care insurance. But where do you buy and who from? Most people can buy long term packages directly from their insurance agent, financial planner, or broker. Those are all viable options.

However, residents in some states may be able to attain coverage through a State Partnership Program that links special Partnership-qualified (PQ) policies provided by private insurance companies with Medicaid. These PQ policies:

Help people purchase shorter-term, more complete long term care insurance

Include inflation protection

Allow you to apply for Medicaid under modified eligibility rules if you continue to to need long term care and your policy maximum is reached

Include a special “asset disregard” feature that allows you to keep assets like personal savings above the usual $2,000 Medicaid limit

Many private and public employers, including the federal government and some state governments, also provide group long-term care programs as a voluntary benefit. While employers do not generally contribute to the premium cost under these programs, they are frequently open to negotiating a favorable rate for you. If you’re already employed, it may be easier to qualify for long term care insurance through your employer than it is to purchase on your own.

And for those of you employed by the Federal government, you already have a long term care option available: the Federal Long Term Care Insurance Program (FLTCIP). Sponsored by the Office of Personnel Management (OPM), FLTCIP was designed specifically to meet the long term care needs of federal employees.